Commentary Subsidiary operations in China: Learning in an evolving institutional environment

Abstract

While these three studies investigated different aspects of MNE operations in China, they all seem to converge on one important research topic: the multifaceted role of learning in the choice of a firm's international expansion strategy (e.g., timing of entry into the Chinese market) or the choice of an organizational form as the vehicle for expansion (e.g., mode and extent of managerial control). The results show that learning occurs not only between foreign and local Chinese partners but also between existing and potential entrants from the same or culturally similar countries. In addition, they also suggest that learning affects not only the initial entry decision and mode choice but also the evolution of the relationship between the MNE entrant and its local partner over time. Furthermore, the study by Wang and Nicholas demonstrates that a MNE entrant into the highly dynamic Chinese market can expect to acquire new information about the country's evolving institutional environment and may find it advantageous to modify its strategic or organizational choices as the country's institutional reform progresses.